Yes, governments now understand the horrors of inflation, that is why world inflation has fallen so dramatically. Inflation makes rational investment impossible, undermines confidence in money, and leads to spiralling wage claims as people try to compensate themselves for what they lost through it last year and anticipate they will lose next.

But inflation is still a mightily hard thing to manage. A few months ago, the Bank of England unleashed £200 billion of 'quantitative easing' on the UK economy – a sort of high-tech version of simply printing money. I argued that this wouldn't be the disaster my monetarist friends feared. Shell-shocked by the crisis, the banks were simply taking all this new cash and putting it in their vaults to keep themselves safe, rather than using it to create a spiral of new loans that would inevitably go towards bidding up the prices of just about everything. Customers too, scared by the crash, were borrowing less, and paying down theid debts. So the new money was not leaking out of the banks' vaults and into the real economy.

And yet, UK inflation creeps up month by month. Today it transpired that Britain's Consumer Price Index hit 3.7% in April, well above the 2% target and the highest figure in 17 months. The Retail Price Index, which many people trust more because it includes housing and other costs that CPI doesn't, is even higher, up a quarter to 5.3%. Maybe that is because lending and borrowing has indeed started to take off again. Yesterday we heard that mortgage lending is a spectacular 45% higher than last year, as first-time buyers return to the market. That is the ninth consecutive month of growth. And the number of mortgage loans rose 25% between February and March.

So maybe that new money that the Bank of England has electronically 'printed' is indeed going into the real economy after all. And like all new money, it is going first into assets, like houses. From there it spreads out through other, more and more liquid things, until all sorts of prices are affected. Indeed, it is beginning to look as if this has already happened. The world has won the war on inflation, but individual battles still have to be fought. And often, in the smoke and confusion of day-to-day economic policy, it can be hard to know if you are winning or losing.